August 9, 2011

starting a company on third base

there's an interesting blog post kicking around the internets this week titled "why i quit my job to start a tech company." it follows the path to start-up success taken by a former wall streeter who, at age 25, decided to change his career after seeing the power mark zuckerberg wielded in a room full of media executives.

the blog post has been particularly popular with stanford MBAs, many of whom hope to follow a similar path. i agree that we need more capable people actually building companies that solve problems, but i'm troubled by what appears to be an obvious omission from the story.

although i appreciate the post's sentiment, let's not overlook how much easier it is to embrace this type of advice ("be bold! take risks! follow your passions!") when you have savings from your private equity job to fall back on. the luxury of start-up capital is a very real factor in one's ability to pursue a dream.

there's a saying that it's easy to hit a home run when you're born on third base. similarly, many of the struggles that crush budding entrepreneurs (like overwhelming debt and limited access to talent and partnerships) are greatly ameliorated by access to capital.

i don't mean to diminish the writer's accomplishments -- i admire his drive and tenacity, and it sounds like he created a lot of his success through hard work. but in the viral frenzy to share this feel-good story, i don't want the nuances of reality to get lost: starting a company is hard work, but it's even harder if you truly start from nothing.


Tucker Bradford said...

Well stated. This is just as true of following any passion. As we count down the days to the commencement of our big goal, I'm reminded that many (if not most) of the people we meet as we sail around the world will not have the capacity, no matter how dedicated/driven/intelligent they are, to achieve what we will.
Considering this fact, I hope, will help me to be mindful and willing to help when and where I am able.

anneke jong said...

beautiful comment, tucker. thanks!

MLR said...

True enough - I left finance and jumped into a startup that ultimately ran out of money, leaving me unemployed. I learned a lot about running a business, but I didn't know that the failing part itself was probably the most informative. Having the worst thing that could possibly happen happen actually made me fear failure less and encouraged me to do something more risky. I decided to move across country with only the hope of finding something I wanted to do. I haven't yet ventured so far as to start my own thing yet, but I joined a company nearly as risky. I couldn't be happier.

All that said, I wouldn't feel as comfortable taking the risks (to leave banking, to pack up and move, to take a sub-2007-base-salary job at a company on the verge of bankruptcy) if it hadn't been for the extra financial padding my banking job gave me. Anneke, you're right, it's easier to say to "take risks" than actually do it (for a shitton of reasons beyond just financial security), but I'm trying to keep my cost-base low and my desire to find my next thing high, so that when I feel like the time is right, I can make a move quickly.

Steven Loi said...

Appreciate your thoughts and putting this into perspective. Sometimes I get caught up reading success stories (although raising capital doesn't necessary result in automatic success) and be bit down that I couldn't take my first startup to the next level. As a first time entrepreneur straight out of college, I lasted two years before looking my team in the eye and telling them that they've amassed far more skills than what I could pay them in the startup. My cofounder and I painfully helped them (and ourselves) with resumes to get into a more stable paying, venture backed startup. While that was painful in itself, I learned so much from it. More importantly, that decision to know when to fold allowed all team members to land great startup jobs. We were completely bootstrapped and we all came from blue collar families with no life savings. That was a huge obstacle that eventually was too big to overcome. We couldn't go for that double or that triple knowing that if we struck out, we all wouldn't have been able to meet rent and feed ourselves. That said, I am appreciate of that experience and learned you'll need to know when to make calculated risks and when to back away.